IRVINE & SILICON VALLEY – May 16, 2016 – Ten-X, the nation’s leading online real estate marketplace, today released its latest U.S. Retail Market Outlook, including the top five ‘Buy’ and ‘Sell’ markets for retail real estate assets. The long-term forecast reveals Miami, Fort Lauderdale, Fla., Austin, Texas, Northern Virginia, and Los Angeles as markets in which investors should consider buying retail assets. The research also indicates that Central New Jersey, Detroit, Baltimore, Cleveland, and Memphis, Tenn., are markets in which investors might consider selling these properties.

Ten-X Research suggests that the top five ‘Buy’ markets will attract investors as a result of their favorable economic conditions and growing projected rents. Meanwhile, ‘Sell’ markets are likely to weaken due to their relatively low demand for retail space and stagnating population growth. Overall, however, the report indicates that the market is slowly improving nationwide, as absorption continues to outpace new supply of retail space.

“With retail vacancies dropping to 10 percent, a 20 bps year-over-year decline, the sector is slowly but surely inching toward pre-recession levels,” said Ten-X Chief Economist Peter Muoio. “Though select markets, particularly in the Northeast and Midwest have lagged in recent months, the overall forecast for retail real estate remains strong in the coming years. By 2018, we expect vacancies to drop to the eight percent range, despite increased competition from e-retailers.”

The Ten-X U.S. Retail Market Outlook also projects an increase in effective retail rents – around three percent per year – through 2018 as vacancies continue to drop. The research does, however, indicate that this growth rate may slow to about one percent by 2019.

2015-2019 U.S. Retail Projections:

Top 5 Buy Markets

2015 Final Effective Rents (per square foot)

2019 Forecast Effective Rents (per square foot)

Change in Effective Rents (percentage)

2015 Final Vacancies

(percentage)

2019 Forecast Vacancies (percentage)

Change in Vacancies (bps)

Miami

22.81

26.78

17.4

6.0

4.2

-180 bps

Fort Lauderdale, Fla.

17.38

20.16

16

9.2

6.7

-250 bps

Austin, Texas

20.19

23.85

18.1

6.5

5.9

-60 bps

Northern Virginia

26.04

29.81

14.5

5.2

4.2

-100 bps

Los Angeles

27.67

31.87

15.2

6.4

6.1

-30 bps

To 5 Sell Markets

2015 Final Effective Rents (per square foot)

2019 Forecast Effective Rents (per square foot)

Change in Effective Rents (percentage)

2015 Final Vacancies

(percentage)

2019 Forecast Vacancies (percentage)

Change in Vacancies (bps)

Central New Jersey

20.45

21.32

4.3

10.3

10.6

30 bps

Detroit

15.27

15.76

3.2

11.6

10.8

-80 bps

Baltimore

20.29

21.33

5.1

6.6

7.4

80 bps

Cleveland

13.28

13.88

4.5

14.9

14.9

0 bps

Memphis, Tenn.

12.24

12.72

3.9

11.2

10.6

-60 bps

U.S.

17.53

19.43

10.8

10.0

9.2

-80 bps

The Retail Sector’s Top Five Buy Markets*:

Miami

Though job growth has slowed recently, Miami’s local employment numbers are at an all-time high, fueled largely by momentum in the hospitality sector. Ten-X’s research team predicts that, by 2019, retail vacancies will drop to the low-4- percent range, while rents simultaneously grow to the high-4 percent range. These factors are likely to translate to strong NOI growth for investors in the coming years.

Fort Lauderdale, Fla.

Fort Lauderdale’s economy has improved across the board since 2011, and Ten-X’s research indicates more of the same for the next three years. As the city’s population continues to expand at a healthy clip, employment growth is projected to hover around 3 percent. The city’s economic resurgence is proving to be a boon to the local retail sector, with vacancies plummeting to the mid-6- percent range while effective rent rate growth quickens to 3.8 percent by 2019.

Austin, Texas

Austin’s economy is hot, as a population explosion fuels a high-3-percent employment growth rate. Demand for retail space is strong, and although vacancies fell only 10 bps from one year ago – to 6.5 percent – Ten-X predicts that they will drop below 6 percent by 2019. Healthy rent gains also signal high NOI growth, which is projected to average in the low-5 percent range through 2018, after which it is expected to decelerate to around 2 percent.

Northern Virginia

The Northern Virginia economy, propelled largely by government and defense contracts, has grown 2 percent from last year as its employment reaches an all-time peak. The region’s population is still growing, albeit slower than in previous years, while the retail real estate supply pipeline has diminished. Ten-X projects that, by 2019, vacancies will reach the low-4- percent range while rent growth fuels a near-5 percent NOI growth. However, according to Ten-X’s 2019 stress test, both rent growth and NOI’s are likely to plateau in 2019.

Los Angeles

Thanks to the region’s robust education and healthcare services sectors, payroll growth in Los Angeles has averaged 2.5 percent in the last four years, resulting in an increase in discretionary spending power. And while the metro unemployment rate is still in the high-5 percent range, it’s dropping rapidly. Despite the city’s negative absorption in 2015, the area’s healthy economy will drive a decline in retail vacancies over the next few years, with projections indicating a drop to 5.8 percent in 2018. NOI growth is expected to be healthy at an annual rate of 3.7 percent.

The Retail Sector’s Top Five Sell Markets*:

Central New Jersey

The Central New Jersey economy isn’t performing poorly – payrolls have grown, particularly in the business and professional services sector, which grew by 5.8 percent from a year ago – but the outlook for rent growth and NOI gains is somewhat dim. Retail vacancies are projected to remain in the mid-10 percent range for the next three years, while rent growth is expected to reach only 1 percent during the same time period. Similarly, NOI growth is projected to hover around a meager 1 percent.

Detroit

Still struggling to recover from the recession, Detroit’s employment figures remain low. Even with a scant development pipeline, the city is expected to have slow population gains, and retail absorption is projected to be modest, leaving vacancies around a projected high-10-percent range by 2019. During that time, rent and NOI growth are expected to be tepid, at 0.8 percent and 1 percent, respectively.

Baltimore

Baltimore’s economy has been somewhat of a mixed-bag, having posted healthy job growth in the past year, while population growth decelerated for the third consecutive year. Retail vacancies are likely to shrink slightly through 2018, but with 500,000 square feet of retail space coming online in 2019, vacancy rates are projected to jump to the mid-7 percent range. This new supply will also affect rent growth, which is expected to decline to the low-2 percent range, while NOI growth will average only 1.1 percent through 2019.

Cleveland

Suffering from a diminished manufacturing sector, Cleveland’s population has declined in 17 of the last 18 years. While employment has increased and vacancies tightened slightly, Ten-X’s 2019 stress test suggests that the retail market is not headed for a speedy recovery. By 2019, vacancies are projected to balloon to the high-14 percent range, while yearly rent and NOI growth will both likely hover around 1 percent.

Memphis, Tenn.

Memphis’ local economy has yet to fully recover from the recession, as stagnant population figures and an above-average unemployment rate continue to hamper its growth. Retail demand in the market is relatively weak, despite little supply coming to market in the coming years. Ten-X’s research projects that vacancies will fall only slightly to the mid-10 percent range by 2019, while yearly rent and NOI growth average around 1 percent and 1.2 percent, respectively.

*Data source for Top Buy/Sell Markets: REIS, Ten-X Research forecasts.

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About Ten-X

Ten-X is the nation’s leading online real estate marketplace and the parent to Ten-X Homes, Ten-X Commercial and Auction.com. To date, the company has sold 200,000+ residential and commercial properties totaling more than $37 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions entirely online. Ten-X is headquartered in Irvine and Silicon Valley, Calif., and has offices in key markets nationwide. Investors in the company include Google Capital and Stone Point Capital. For more information, visit Ten-X.com.